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Business rates and coronavirus grants

  1. James Martini

    James Martini UKBF Ace Staff Member

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    The campaign to reform business rates in England was gathering momentum long before a one-year holiday was handed to firms in the retail, hospitality and leisure industries last month. 

    Prior to the COVID-19 crisis, the current system had been slammed as “outdated” and for playing a leading role in the number of empty premises on high streets around England.

    “Without the current business rates system, we’d have far fewer empty shops on our high streets”, said Mike Cherry, chairman at the Federation of Small Businesses. “We should be scaling back a tax that and recalibrating business rates to encourage a mixture of thriving small businesses on diverse high streets, which are at the heart of communities.”

    Relaxed rules kicked in for around 900,000 eligible properties, regardless of their rateable values, on 1 April 2020 and is estimated to save firms in those sectors around £11 billion before the break expires.

    An extended £5,000 business rates discount for pubs in England with rateable values of less than £100,000 also took effect last week and will remain in place until 31 March 2021. 

    Local authorities are automatically applying those discounts or exemptions to council tax bills of ‘high street’ businesses in those sectors with immediate effect. 

    It’s a timely boost for shops, restaurants, cafes, pubs, nurseries, cinemas, live music venues, leisure centres, estate agents, letting agents, bingo halls and hotels, among others, in the current climate, with life indefinitely on hold until the UK coronavirus peak has passed. 

    Further change to business rates in England could be in the pipeline after the Government promised to conduct a “fundamental review” of the system:

    Building on the work of previous reviews, the Government’s general view is that in common with other advanced economies, revenue should continue to be raised through the taxation of non-residential land and property... Business rates are less distorted than other taxes, easy to collect and hard to avoid. However, the Government also recognises concerns about the impact of business rates on ratepayers, including on the high street, and the potential need to modernise our tax system.

    Before events around COVID-19 escalated, the Government promised a call for evidence in spring 2020 with plans to report by autumn 2020. That could mean we’ll see an announcement in the Autumn Budget although, of course,  it would be no surprise to see this review delayed given all that’s going on. 

    Business rates also tie in closely with recently-announced Government loans and grants, which are attempting to help firms avoid a cliff-edge scenario at a time when the pause button has been hit on the global economy in an effort to contain the coronavirus pandemic. 

    Small business grant

    Most English-based firms in receipt of small business rate relief or rural rate relief as of 11 March 2020 are eligible for emergency funds to help meet any ongoing costs during the COVID-19 crisis. 

    To support those firms, the Government coughed up £3.4 billion to the 343 local authorities in England for distribution of one-off grants worth £10,000 apiece. Local councils are reaching out to those businesses as we speak.

    Crucially, the business needs to be the occupier of the property to be eligible for a grant, which suggests - to me, at least - landlords who have their names on the deeds may be deemed ineligible. 

    Retail, hospitality and leisure grant

    A separate emergency funding scheme may apply to firms in England that were in receipt of the expanded retail discount on 11 March 2020. 

    The business needs to operate in the retail, hospitality or leisure sectors and should have a rateable value of less than £51,000 to be deemed eligible. 

    Firms in these sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000 from their local authority. 

    Retail, hospitality and leisure businesses whose properties have a rateable value of between £15,000 and £51,000 will get a grant of £25,000. 

    Properties with rateable values of more than £51,000 are excluded from the scheme, along with firms that pay no business rates. 

    Council contact

    The Government states that local authorities have received their slice of the emergency funds and that firms should wait to be contacted. 

    Bear in mind that local authorities may be operating skeleton staff, have employees working from home or even furloughed. 

    If an authority chooses to write a formal letter, they may send it to a business premises which is closed during the lockdown. 

    Given the circumstances, check your local authority’s website to see if an electronic form has been put up on their website for owners to complete.

  2. stuart deeley

    stuart deeley UKBF Newcomer Free Member

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    We have been in our building for over 30 years, as a charity we have received mandatory rates relief over the years and so never really challenged the rateable value.
    however we now find ourselves on the wrong side of the £51,000 cut off by £4500.
    I have approached my local MP who has yet to reply to my specific question but I am heartened to see others on this forum in a similar situation.
    The cut of £51,000 is an arbitrary one which is used to define a small business, however, like others on this forum, we have a large building which is valued by floor space rather than business turnover.
    I will be appealing to both the VO and the local council on the following grounds

    1 the m2 value of £25 per m2 makes no account of the usability of the floor area of the property, nor is there recognition that larger buildings would be less likely to be rented as a whole therefore the m2 valuation should decrease with an increase in size

    2 given the current usage the rateable value % of turnover is extremely high at 18%, a result of the industry we are in

    3 there was insufficient leeway given for companies such as ourselves to react to the need to consider the gross rateable value, like many, the net figure was the one we were aware of as it was the financially key one

    if there are others out there with similar arguments I would like to make contact, perhaps it is a cause which would be of interest to the BBC if there were enough of us
    Please contact me directly or through this chat site
    Thank you
    Stuart Deeley
    Posted: Apr 21, 2020 By: stuart deeley Member since: Apr 21, 2020